Money is about choices

I frequently hear people say "I don't have the money to..." Often, those are the very same people that I see spending recklessly at the grocery, eating out a lot or generally squandering money.

Here is the simple truth:

Money is about choices.

Would you be willing to live on Ramon noodles and water to buy your child a Wii?

Because of the obvious health risks, this is probably not a great choice.

Obviously, we make financial choices about “big stuff.” We choose a larger house/apartment but know that our car is going to have to last a little (or a lot) longer. We choose private school but realize that we can not buy a new house.

One family goes on vacation three times a year. Sounds lovely, doesn‘t it? However, they never eat out, buy all of their clothes from second hand shops and clip coupons religiously. Their children (ages 7 and 5) have never even had a happy meal.

We all make daily purchasing decisions that may or may not reflect the priorities we have as a family. Experts recommend spending no more than 20-35% on housing. Other cost are random but also pretty fixed: your child probably will need to see the Doctor at least once in the next few months. However, does what you spend the other 65-80% on really reflect what you want as a family?

Try this simple exercise, write down 10-15 things that you spend money on. Depending on your family circumstances, needs and desires, this list will be a little different. However, here are a few suggestions:

* Lessons/sports/classes for the kids. (for some families this can be over $1500 a year)

* Convenience foods (i.e. precooked chicken, lunchables etc. )

* Eating out at lunch from work

* Eating out as a family

* Taking the time to clip coupons/send in rebates etc.

* Buying clothes retail

* Buying toys retail

* Membership in a health club, amusement park, museum, Zoo

* Private school tuition

* Trips to visit out of town relatives/friends

* Vacation(s)

* Paying off credit card debt

* Tithing, temple dues, other charitable giving

If you are contemplating some life changes, you may also want to add:

* Having a car (or a second car)

* Having/getting a larger house/apartment

* Having one parent stay home part/full time

* Having one parent go back to work full/part time

Print out your list enough times for you, your spouse and any children old enough to understand budgeting ( somewhere between 6-10 depending on your child). On their own paper, ask each person to rank the items from 1 to 10 with 1 being unimportant and 10 being crucial to them. Then compare notes. You may be surprised that your kids don’t really mind sharing a room and don’t care about a larger house. You may learn that your kids wouldn’t mind giving up lunch out after church every week if they know that they might be able to go to Disney instead. For other families, the weekly lunch may be such a great time to reconnect that no one wants to give up.

Most of us occasionally wish for more. However, most of us also sometimes spend (at least sometimes) without thinking about it. As grandma always said…a penny saved is a penny earned.

Our personal financial pie is fixed. However, how we divide is up to us. Cut carefully!